My new book is now available to buy here in print version, and for pre-order in the Kindle version (will be released on Friday). As with my earlier books, I am excerpting roughly 10% of the 400 page book in a series of posts on my two blogs.

Chapter 2 focuses on missed opportunities for SAP competitors over the last 5 years to deliver a knockout punch while SAP was distracted and vulnerable. It also covers 8 very large markets that SAP and its cohorts missed out in the last two decades.

"SAP looked vulnerable when I wrote the first volume of this book series, five years ago. Besides the runaway costs and massive project failures at some customers, even more concerning was the fact that the competition was circling around.

Oracle had a decade’s lead with its Fusion cloud applications over what SAP was working on — S/4. Microsoft had already invested billions in its Azure cloud data centers, and could have used them to significant advantage in business applications. Infor had a new management team that was focused on vertical applications for many industries.

Customers were using Workday, Ultimate Software and Salesforce to “ring-fence” SAP, and were deploying lighter cloud applications, like NetSuite, in global, two-tier ERP settings. Those SaaS vendors had introduced the efficiencies of multitenancy to the overpriced enterprise applications market. They bundled software, application management, hosting and upgrades into one contract, which was priced as a per-user service.

TPM vendors like Rimini Street, Spinnaker Support and Support Revolution, with their cut-rate pricing and, especially, their support for customizations, threatened to hollow out SAP’s highly profitable ECC maintenance revenue stream.

S/4 has not been a runaway success, but SAP’s competition has not exactly gone for the kill either."

"But from a customer perspective, you cannot run your enterprise without order entry, billing, manufacturing, logistics and industry-specific functionality. There is only so much you can do with Salesforce, Workday or ServiceNow. You can do even less if you are outside the U.S.

It is a bit like the aviation sector. Southwest is one of my favorite airlines. I love it because it flies nonstop to over 30 cities from my home airport in Tampa, FL. But flights on its 737s average only two hours, and that cannot take me on global treks . If I lived in Germany, Singapore or Rio, it would be even less interesting because Southwest has chosen to stay focused on the North American market.

Partly because SAP’s competitors did not target it aggressively enough, and partly because its own cloud acquisitions and developed products afforded it a shield, the company has come through the threat of the last five years relatively unscathed. In fact, when you look at the mob of strong competitors that it had to fend off, it has done remarkably well. In those five years, SAP’s customer count has actually increased by 50%. Wall Street has not been as generous to SAP as it has to cloud vendors, but the existential threat that SAP faced has passed."

"My Deal Architect blog focuses on enterprise tech — so I could see what SAP, Oracle, Salesforce, Workday, etc. were doing. My New Florence blog, on the other hand, had a broader STEM focus and covered innovations in health tech, clean tech, consumer tech and other emerging markets. In 15 years, it has catalogued over 6,000 posts. It also gave me the ammunition to write a number of books that profiled hundreds of case studies. This contrast between the two blogs allowed me to see several trillion-dollar markets emerge — markets that SAP and its cohorts have mostly ignored. The following eight subsections will describe those missed opportunities:"

" The new rock stars were product designers like Jony Ive at Apple and Yves Behar at fuseproject. Contract manufacturers like Foxconn, Jabil and Flex and design firms like IDEO benefited from this massive new market. But SAP, Oracle or even Indian outsourcers? Not so much. In fact, based on the attractive design increasingly prevalent in consumer markets, enterprise vendors started to be scrutinized for their own poor UX. I have heard Mark Hurd, co-CEO of Oracle, quantify these trends in his presentations. He says consumer spend on technology has caught up to enterprise spend — annually about $1 trillion each — and is growing faster. Even more dramatically, over 80% of enterprise tech is spent on keeping the lights on, not innovation. In contrast, the consumer is getting almost pure innovation for her dollar. What Hurd does not point out is that because of Oracle or at his previous company, HP, or peers like IBM, software maintenance, EDS outsourcing and other charges have been large contributors to the enterprise tech stagnation. They have delivered nowhere near the price/ performance improvements or innovation that consumer tech has seen. It should be no wonder then that the tech the consumer gets at home on Sunday night or in her car is so much better than what she finds at work on Monday morning."

"CRM vendors are increasingly focused on the entire customer experience and CX is the new byword for this sector. And yet, most of these vendors (with exceptions like the Adobe Advertising Cloud and Salesforce’s Datorama acquisition) have missed out on some of the biggest budgets in the CX segment — digital advertising. In the last two decades, digital advertising has grown from near zero to over US$200 billion a year. Eons ago, digital advertising had already outrun print advertising. Now it has overtaken TV advertising. Marketers have moved to programmatic advertising, where machines, more than humans buy advertising. Google, Facebook and increasingly Amazon are the big beneficiaries of this shift in marketing dollars. With the massive growth in digital advertising, Accenture Interactive has aggressively acquired digital agencies, making it now the biggest agency in the world. It would be fair to say it is influencing CX trends as much, if not more, than the early- generation CRM software vendors did. Accenture Interactive has little in common with its traditional IT outsourcing brethren. Accenture’s IT outsourcing group does plenty with ERP and CRM software vendors. Interactive does fine on its own and includes as clients the chief marketing officers (CMOs) of over three-quarters of the Fortune 100. It does not need to chase after Salesforce or SAP."

"GE had talked about the “power of 1%”: 1% in fuel savings for aviation and utilities, 1% of productivity improvement in healthcare, 1% reduction in oil and gas cap-ex, etc. The payback they described was in the hundreds of billions. You hear similar claims from IT vendors, but somehow the tiny 1% factor made it much more believable.

GE has since had a meltdown over issues related to its capital and power business units. But the presentation I saw back in 2012 woke up executives in every industry to the power of listening to machines. And it has led to a batch of smaller vendors like C3 and Uptake as well as other industrial asset companies like Siemens and Schneider Electric that are helping companies realize that 1% payback."

" I hear similar comments from CIOs around the world: Facebook, Amazon and Microsoft — who expected them to be so innovative with data centers and networks? This was a technology infrastructure market where IBM, HP with EDS, Oracle with Sun and large telcos around the globe had dominated. They should have been leading this market in investment and innovation, but for years chose not to do so. Now they are play- ing catch-up, and others should give up as Blumberg suggests."

" Other enterprise vendors have similarly struggled to keep up with these industry changes. This has led to opportunities for new players. For example, the fintech sector is fragmented with many promising start-ups and offerings from large institu- tions like Goldman Sachs, but little from the major application vendors. In China, mobile apps like Ant Financial’s Alipay and Tencent’s WeChat now enable half-a-billion Chinese people to access a dizzying array of financial services to make payments, get loans, monitor investments and credit ratings, pay for taxis and book travel."

"Most enterprise vendors are now talking about AI and ML, but not automation on the shop floor, in logistics or in the oil patch. Also, if you peel their ML onion, you realize many are merely leveraging voice or image recognition technology from Amazon, Google or Microsoft. When you look at the massive amount of image and vocal-accent data their machines had to be trained on, you wonder where enterprise vendors will get their own training data, given that most of it is squirreled away in on-premise customer data centers. They have been creative with branding — Salesforce with Einstein, IBM with Watson and Infor with Coleman (as in Katherine Coleman Goble Johnson, the NASA mathematician profiled in the movie Hidden Figures) — but with limited enterprise impact. Indeed, when Salesforce and IBM announced Einstein and Watson would work together, IBM CEO Ginni Rometty chuckled in an interview with Fortune that “It’s good comedy.”"

" Most of these vendors have brilliant technology visionaries: SAP has Dr. Plattner; Oracle has Larry Ellison and Thomas Kurian (till he moved to Google); Salesforce has Parker Harris; Workday has Stan Swete. The list is long. However, they don’t have enough process visionaries who can dream up next-gen shop floors, emergency rooms or warehouses. So you see the industry continue to invest in infrastructure, platforms and tools."

" By 1820, Americans were well ahead in the race against other global powers like the British and Spanish in the effort to dominate the North American continent. Five years ago, it seemed improbable, but by 2020 SAP will have a similar opportunity to lead the enterprise technology “continent.” It is build- ing momentum, and has been going through massive changes."

Comments

My new book is now available to buy here in print version, and for pre-order in the Kindle version (will be released on Friday). As with my earlier books, I am excerpting roughly 10% of the 400 page book in a series of posts on my two blogs.

Chapter 2 focuses on missed opportunities for SAP competitors over the last 5 years to deliver a knockout punch while SAP was distracted and vulnerable. It also covers 8 very large markets that SAP and its cohorts missed out in the last two decades.

"SAP looked vulnerable when I wrote the first volume of this book series, five years ago. Besides the runaway costs and massive project failures at some customers, even more concerning was the fact that the competition was circling around.

Oracle had a decade’s lead with its Fusion cloud applications over what SAP was working on — S/4. Microsoft had already invested billions in its Azure cloud data centers, and could have used them to significant advantage in business applications. Infor had a new management team that was focused on vertical applications for many industries.

Customers were using Workday, Ultimate Software and Salesforce to “ring-fence” SAP, and were deploying lighter cloud applications, like NetSuite, in global, two-tier ERP settings. Those SaaS vendors had introduced the efficiencies of multitenancy to the overpriced enterprise applications market. They bundled software, application management, hosting and upgrades into one contract, which was priced as a per-user service.

TPM vendors like Rimini Street, Spinnaker Support and Support Revolution, with their cut-rate pricing and, especially, their support for customizations, threatened to hollow out SAP’s highly profitable ECC maintenance revenue stream.

S/4 has not been a runaway success, but SAP’s competition has not exactly gone for the kill either."

"But from a customer perspective, you cannot run your enterprise without order entry, billing, manufacturing, logistics and industry-specific functionality. There is only so much you can do with Salesforce, Workday or ServiceNow. You can do even less if you are outside the U.S.

It is a bit like the aviation sector. Southwest is one of my favorite airlines. I love it because it flies nonstop to over 30 cities from my home airport in Tampa, FL. But flights on its 737s average only two hours, and that cannot take me on global treks . If I lived in Germany, Singapore or Rio, it would be even less interesting because Southwest has chosen to stay focused on the North American market.

Partly because SAP’s competitors did not target it aggressively enough, and partly because its own cloud acquisitions and developed products afforded it a shield, the company has come through the threat of the last five years relatively unscathed. In fact, when you look at the mob of strong competitors that it had to fend off, it has done remarkably well. In those five years, SAP’s customer count has actually increased by 50%. Wall Street has not been as generous to SAP as it has to cloud vendors, but the existential threat that SAP faced has passed."

"My Deal Architect blog focuses on enterprise tech — so I could see what SAP, Oracle, Salesforce, Workday, etc. were doing. My New Florence blog, on the other hand, had a broader STEM focus and covered innovations in health tech, clean tech, consumer tech and other emerging markets. In 15 years, it has catalogued over 6,000 posts. It also gave me the ammunition to write a number of books that profiled hundreds of case studies. This contrast between the two blogs allowed me to see several trillion-dollar markets emerge — markets that SAP and its cohorts have mostly ignored. The following eight subsections will describe those missed opportunities:"

" The new rock stars were product designers like Jony Ive at Apple and Yves Behar at fuseproject. Contract manufacturers like Foxconn, Jabil and Flex and design firms like IDEO benefited from this massive new market. But SAP, Oracle or even Indian outsourcers? Not so much. In fact, based on the attractive design increasingly prevalent in consumer markets, enterprise vendors started to be scrutinized for their own poor UX. I have heard Mark Hurd, co-CEO of Oracle, quantify these trends in his presentations. He says consumer spend on technology has caught up to enterprise spend — annually about $1 trillion each — and is growing faster. Even more dramatically, over 80% of enterprise tech is spent on keeping the lights on, not innovation. In contrast, the consumer is getting almost pure innovation for her dollar. What Hurd does not point out is that because of Oracle or at his previous company, HP, or peers like IBM, software maintenance, EDS outsourcing and other charges have been large contributors to the enterprise tech stagnation. They have delivered nowhere near the price/ performance improvements or innovation that consumer tech has seen. It should be no wonder then that the tech the consumer gets at home on Sunday night or in her car is so much better than what she finds at work on Monday morning."

"CRM vendors are increasingly focused on the entire customer experience and CX is the new byword for this sector. And yet, most of these vendors (with exceptions like the Adobe Advertising Cloud and Salesforce’s Datorama acquisition) have missed out on some of the biggest budgets in the CX segment — digital advertising. In the last two decades, digital advertising has grown from near zero to over US$200 billion a year. Eons ago, digital advertising had already outrun print advertising. Now it has overtaken TV advertising. Marketers have moved to programmatic advertising, where machines, more than humans buy advertising. Google, Facebook and increasingly Amazon are the big beneficiaries of this shift in marketing dollars. With the massive growth in digital advertising, Accenture Interactive has aggressively acquired digital agencies, making it now the biggest agency in the world. It would be fair to say it is influencing CX trends as much, if not more, than the early- generation CRM software vendors did. Accenture Interactive has little in common with its traditional IT outsourcing brethren. Accenture’s IT outsourcing group does plenty with ERP and CRM software vendors. Interactive does fine on its own and includes as clients the chief marketing officers (CMOs) of over three-quarters of the Fortune 100. It does not need to chase after Salesforce or SAP."

"GE had talked about the “power of 1%”: 1% in fuel savings for aviation and utilities, 1% of productivity improvement in healthcare, 1% reduction in oil and gas cap-ex, etc. The payback they described was in the hundreds of billions. You hear similar claims from IT vendors, but somehow the tiny 1% factor made it much more believable.

GE has since had a meltdown over issues related to its capital and power business units. But the presentation I saw back in 2012 woke up executives in every industry to the power of listening to machines. And it has led to a batch of smaller vendors like C3 and Uptake as well as other industrial asset companies like Siemens and Schneider Electric that are helping companies realize that 1% payback."

" I hear similar comments from CIOs around the world: Facebook, Amazon and Microsoft — who expected them to be so innovative with data centers and networks? This was a technology infrastructure market where IBM, HP with EDS, Oracle with Sun and large telcos around the globe had dominated. They should have been leading this market in investment and innovation, but for years chose not to do so. Now they are play- ing catch-up, and others should give up as Blumberg suggests."

" Other enterprise vendors have similarly struggled to keep up with these industry changes. This has led to opportunities for new players. For example, the fintech sector is fragmented with many promising start-ups and offerings from large institu- tions like Goldman Sachs, but little from the major application vendors. In China, mobile apps like Ant Financial’s Alipay and Tencent’s WeChat now enable half-a-billion Chinese people to access a dizzying array of financial services to make payments, get loans, monitor investments and credit ratings, pay for taxis and book travel."

"Most enterprise vendors are now talking about AI and ML, but not automation on the shop floor, in logistics or in the oil patch. Also, if you peel their ML onion, you realize many are merely leveraging voice or image recognition technology from Amazon, Google or Microsoft. When you look at the massive amount of image and vocal-accent data their machines had to be trained on, you wonder where enterprise vendors will get their own training data, given that most of it is squirreled away in on-premise customer data centers. They have been creative with branding — Salesforce with Einstein, IBM with Watson and Infor with Coleman (as in Katherine Coleman Goble Johnson, the NASA mathematician profiled in the movie Hidden Figures) — but with limited enterprise impact. Indeed, when Salesforce and IBM announced Einstein and Watson would work together, IBM CEO Ginni Rometty chuckled in an interview with Fortune that “It’s good comedy.”"

" Most of these vendors have brilliant technology visionaries: SAP has Dr. Plattner; Oracle has Larry Ellison and Thomas Kurian (till he moved to Google); Salesforce has Parker Harris; Workday has Stan Swete. The list is long. However, they don’t have enough process visionaries who can dream up next-gen shop floors, emergency rooms or warehouses. So you see the industry continue to invest in infrastructure, platforms and tools."

" By 1820, Americans were well ahead in the race against other global powers like the British and Spanish in the effort to dominate the North American continent. Five years ago, it seemed improbable, but by 2020 SAP will have a similar opportunity to lead the enterprise technology “continent.” It is build- ing momentum, and has been going through massive changes."